Homes continue to sell for more

Existing-home sales soared to new heights in the second quarter of 2005, with prices up 13.6% and volume setting a record, the National Association of Realtors said Monday.

Sixty-seven of the 149 metropolitan areas surveyed by the NAR posted double-digit increases in median home prices from the second quarter of 2004 to the second quarter of 2005. An additional seven had what NAR called "generally modest" price declines — though none of those were areas that had experienced fast price buildup.

The median existing-home price was $208,500 in the second quarter, up 13.6% from 2004. The Phoenix area had the biggest price gains, up 47% from the second quarter of 2004 to $243,400.

Volume was up 4.6% from the previous high of 6.9 million units on a seasonally adjusted annual basis in the second quarter of 2004.

West Virginia saw the biggest surge in existing-home sales, up 21.7%. Washington and Vermont both saw gains of nearly 20%. Five states and the District of Columbia had declines.

The housing market has been setting records since the late 1990s. Price and volume gains in some cities, particularly on the East and West coasts, have been so large that many economists, including Federal Reserve Chairman Alan Greenspan, warn they may be due for price declines.

There are signs of recent cooling in some areas, including slower price gains in California and some other hot markets, a falloff in mortgage refinance applications and a decline in a National Association of Home Builders confidence survey. But analysts are mixed on whether the overall housing market has topped out.

"If you had talked to me a week ago, I would have said, 'Yes, this is the peak and now things are slowing down.' But now mortgage rates have come down," says David Lereah, chief economist for NAR.

"Demand is not slowing down. It's just going to another location," Lereah adds, saying as some hot markets see slower sales or price gains, others post big increases. Las Vegas had 52% year-over-year price gains in the second quarter of 2004. This year, prices rose a more modest 11.2%, but the Reno market jumped 32%.

In Florida, as Palm Beach prices rise more slowly, Palm Bay and Fort Myers are heating up, Lereah says. Prices in Phoenix are soaring, even as price increases in Los Angeles, Orange County and San Diego slow.

In Cumberland, Md., about 140 miles northwest of Washington, prices were up 18.6% from April through June from the same period in 2004. Liz Skidmore, broker owner of Robison & Skidmore Professional Real Estate Services, which serves the area, says more than 50% of recent buyers are from out of the area, including retirees and telecommuters affected by rising prices elsewhere.

"Our average sales price hovers right around $100,000. Any other county in the state, it's two-hundred-plus ... a lot of people are realizing what a hidden treasure this is," Skidmore says, calling multiple offers common on local sales.

NAR said median prices ranged from a low of $73,400 in Danville, Ill., to a high of $726,900 in the San Francisco area.

There have been some signs that the market slowed in July and August, after the survey period.

"The South, particularly Texas, slowed earlier this year, but I think pricing is coming back in those markets," says John Burns, founder of John Burns Real Estate Consulting. He is concerned about a slowdown in San Diego but adds the market has probably gone from an A-plus to a B. Another sign of possible stress: a falling number of first-time buyers in California.

In a separate report Monday, real estate firm DataQuick Information Systems said Southern California's home prices hit a record — the sixth in a row — in July, though volume declined. The median price was $469,000, up 0.9% from June and 16.7% from July 2004.

Marshall Prentice, DataQuick president, said he saw no signs of a "bursting bubble," just the ebb and flow of a real estate cycle.